38 Thoughts On Turning 38

I turned 38 today and I wanted to share some random thoughts about money and life, along with some lessons I’ve learned along the way.

38 thoughts on money and life

1. Start the habit of saving when you’re young – I started putting money away for retirement when I was 19 years-old. Every paycheque had $50 automatically deducted and put into a growth mutual fund inside my RRSP.

2. Avoid consumer debt like the plague – Unfortunately, I got into credit card debt and carried a hefty balance alongside my retirement savings. Eventually I had to withdraw from my RRSP to pay off the credit card debt.

3. Accept that you’ll make mistakes – Even though I got into a lot of debt in my twenties, I learned from my mistakes and pretty much had things turned around within two years.

I don’t remember what it was like to live paycheque to paycheque and spend more than I earn, but I know that I don’t want to be in that situation again.

4. It’s never too late to start. The best time to plant an oak tree was 20 years ago. The second best time is now. Once you have that “a-ha” moment and the light bulb goes on for you and your finances, recognize that you’ve made the first crucial step towards financial freedom. No longer burdened by your past spending habits, you’ve sought out help and made a plan to change.

Whether you’re 30, 40, 50, or 60, it’s never too late to take control of your financial future.

You can also use the time to set up that appointment at the bank, or to get that will you’ve been putting off. Put it in your calendar once a year as your reminder to save money. You never know unless you ask.

6. The TFSA is your friend – Contributing to an RRSP at 19 makes no sense today now that we have the Tax Free Savings Account. This gem allows you to contribute $5,500 per year and make tax-free withdrawals – making this a perfect savings vehicle for short-to-medium term goals when you’re young.

Today, there are many free banking options, and online comparison sites have made it easy to shop around for the best deal on mortgages, savings accounts, and GICs.

8. Why pay bank fees at all? – Canadians are addicted to plastic – 90 percent of our transactions are made with credit or debit. Banks take advantage of this by offering “unlimited” monthly debits for $12 – $15 per month.

Students get hooked on free debits in school and then pay for it once they enter the real world. Switch to a no-fee bank like PC Financial or Tangerine and save yourself $150 per year.

9. Skip school, go to Europe instead – Many high school grads enter post-secondary without a clear direction and so they wander aimlessly through their first and second year of school taking general studies and wasting $10,000 – $20,000 per year.

For half the cost, you could spend six months exploring Europe – arguably learning more about life, culture, and yourself in the process.

10. Advance your career – Be a sponge early in your career. Read and listen to everything you can get your hands on. Find a mentor who is willing to help groom you for success. Once you master your job, start learning what your boss does and take on more responsibility.

11. Go beyond traditional networking – I’ve attended networking events and industry trade shows and came away with nothing more than a few business cards and some shallow conversations.

The real networking happened when I joined outside organizations like the Rotary Club and Chamber of Commerce, and sat on boards at Economic Development and the local Air Show Association. I also chaired a fundraising committee with the MS Society.

You can list those experiences on a resume, but you can’t staple a stack of business cards to it.

12. Ask for more – When I got my first real job, I stupidly accepted the initial low-ball salary offer. It was a mistake that cost me at least $5,000 per year. Remember, all your future salary increases will be pegged off your initial salary. Know what you’re worth, what the industry pays, and negotiate wisely.

13. Negotiate something in addition to salary – Don’t settle for the standard 2 weeks vacation – ask for another week or more. Get time off in lieu of business travel or evenings and weekends spent on the job.

Ask to use your own rewards credit card instead of the company card for your business and travel expenses. Have the company pay for your cell phone bill – especially if you’re expected to be on call and/or checking emails while you’re off the clock.

14. Work life balance is real – When I was young and moving up the corporate ladder, I worked late and spent my free time attending board meetings and networking. It was later on, after my wife was diagnosed with MS and our first of two daughters was born, that I realized I needed to put family first.

I switched careers to something more nine-to-five. I live seven minutes away from my office and come home for lunch every day. I’ve found that balance.

They’ll want to sell you insurance, even though you have no dependants. They’ll want you to invest with them, because you can trust them to do right by you. Do your homework before meeting or signing anything.

16. There is no easy path to wealth – We’ve all seen ads claiming you can earn $5,000 per month (or more) working from home. We’ve seen real estate investment seminars that promise returns of 25 percent or more. Someone is always angling to get at your hard-earned dollars.

Consider what would have to happen in order for your $1,000 investment to make you wealthy. What if it doubles, or even triples? So what? It’s not going to be life changing, so why bother taking a huge risk?

17. The amount you save matters more than your return on that savings – We obsess over investment returns and are willing to move mountains to get an extra half-percent on a savings account or GIC.

But in reality, your savings rate (i.e. how much you save) will make much more of an impact than your annual returns, especially in the early years. Increase your monthly savings from $100 to $150 and you’ll enjoy a 50 percent increase in your savings.

18. Track your income and expenses – The foundation to solid money management is understanding how much money comes in and how much goes out every month. There’s no other way around it – how else will you know what you can afford to save?

19. Estimate your future income and expenses – Budgeting goes beyond tracking what happened in the past. Planning for the future, whether to buy a house or car, or save for a trip, means you need to project where your finances will be several months in advance.

We often forget about those irregular expenses, such as car maintenance, birthday presents, when a raise or bonus might kick-in.

20. Financial planning is about much more than investing – A good financial plan should take stock of your current financial situation and spend a significant time defining your short-term and long-term goals, along with a plan to achieve them.

Most people want to delve right into investing and strategy without considering how important all that other “boring stuff” is to your success.

21. Don’t fall into the trade-up trap – The only case for buying more home than you need is if it prevents you from trading up to a bigger home every 3-5 years.

Tens of thousands of dollars have been wasted because home builders and real estate agents invented terms like “starter homes” and “trading up”. Buy a home that’ll suit you for the next decade or more.

22. That goes for cars, as well – Financing a new car has never been more affordable as dealers and lenders offer loans for up to 96 months to reduce monthly payments.

Hey, I like a new car as much as the next guy, but if you can’t afford to pay it off in 3-4 years max, you can’t afford the car. And quit trading it in for something new every three years. Drive it for at least 10 years so that you can enjoy some car-payment free years.

23. Seek independent advice – I’m not just talking about fee only financial planning advice, but getting independent third party advice in any situation where you’re intimidated by the sales process and the person on the other side of the desk is paid by commission. I’m talking about buying a house, buying a car, negotiating a mortgage, even getting your car repaired.

24. Save on the big things – We stress over bank fees and cell phone bills and ignore some of the ways that we can save thousands of dollars.

25. Switch from expensive bank mutual funds into index funds or ETFs – Seriously, Canadians pay some of the highest mutual fund fees in the world. There is no good reason to pay 2 percent MER every year for a fund that closely resembles an index fund and can be held for a fraction of the cost.

Take a good look at your investment statements and ask your advisor to compare the fees and returns to a suitable benchmark

26. Ask more of your advisor – If you are paying your advisor 2 percent or more, ask what else you are getting for your money beyond investment products.

Are you getting advice and help with your financial plan? You are worth more than a 15-minute meeting once a year along with some investment statements.

27. Change is in the air – Something is happening in the investment industry. It started with mandatory disclosure about exactly what, and how much, you’re paying for your investments.

28. Simplify your finances – In my attempt to optimize every part of my finances I realized I forgot to account for the pain-in-the-ass factor – the time wasted as I researched stocks, found promotional credit cards and savings accounts, transferred money back and forth between a no-fee bank and a full service bank.

There’s something to be said for just finding a simple solution that you can stick to, even if it’s not the optimal solution.

29. Sometimes a job is just a job – Your career doesn’t have to be your passion. You can get great joy and satisfaction pursuing your hobbies and volunteering on the side.

30. Develop an entrepreneurial mindset – It’s been said that Gen Y has it a lot tougher than previous generations due to the lack of job prospects and heavy burden of student debt. This generation is going to have to develop an entrepreneurial mindset in order to succeed.

Start a business, move across the country (or to another country) and don’t wait for the ideal career to fall into your lap.

31. Read (and watch) less – There’s an abundance of financial information out there that should be classified as entertainment rather than news.

Nobody, not even Warren Buffett himself, knows where the markets are headed, where interest rates are going, or what our government (or China’s, for that matter) is going to do in the future.

32. Unplug from time-to-time – While you’re at it, put away your smart-phone and unplug from social media and the internet every once in a while. Some of my best thinking and planning is done when I’m out for a early morning run, or when I’m reading, you know, an actual book.

33. Know when to hustle – I started this business after my daughter was born and she started sleeping through the night. Suddenly I had a lot of free time during the evenings – time I could’ve spent watching TV or playing games. Instead I chose to start a blog and educate myself on financial matters.

Now that the kids are older and life can be a bit more hectic, I find some time in the early morning, before anyone is up, to write an article, pitch a new client, or work on my business.

34. You don’t know what you don’t know – I consider myself a financial expert, but there are tons of people out there with smarter ideas on money, particularly when it comes to specific areas of expertise such as retirement planning or insurance, for example.

I try to learn from these experts as much as possible, but it’s even more important to look outside of our own industry and echo chamber – to try and solve financial problems and explain new ideas from a different perspective.

35. Invest regularly, rebalance occasionally, and tune out the noise – There’s a reason why it’s called buy and hold. You can’t change gears every year and expect to achieve success with your investments.

36. Track your investment returns – Many DIY investors have been on a great ride since 2009. Brimming with overconfidence since dumping their advisor after the 2008 crash, it’s been double digit returns ever since.

But if you’re not tracking your investment returns against an appropriate benchmark, how do you know if it was your skill or just blind luck that got you those returns? Would you have been better off buying an index fund and enjoying the bull market ride?

37. Travel more, later – Contrary to popular belief, you don’t have your passport stripped away and become permanently grounded after having kids and turning 30. There are plenty of years left for travel, if you plan for them.

I know we have big travel plans once our kids are a bit older. Yes, I could get hit by a bus tomorrow and miss out on all the places I’ve yet to see. That’s why my motto is, “look down the road”.

38. Spend on things you enjoy – I’m not a big latte fan, but if you enjoy expensive coffee then who am I to criticize? There are plenty of more expensive vices out there, from alcohol to cigarettes, to gambling.

Spend on things that bring you joy (or save you time) and try to save money in other areas to offset your splurges.

Happy birthday! Much wisdom, but you’re still a young pup!
As for #9, a better way to state the cost of taking a year off before buckling down to real life is not wasting the cost of the initial trip ($10-$20k). The true cost is the salary you will miss out on at the end of your career, your highest earning years as you have cut your working life by a year at the beginning. This can be significantly higher than $10k. Presented this way, it’s possible different choices would be made.

#7 – when I was young I had an account with a local credit union. As I got older and working I’ve had many accounts with banks and other credit unions, but never closed my childhood credit union account. Now it’s my primary institution because of the free banking options.

#9 – I went to university for 2 years and then worked and then went to Europe for 6 months! Do kids still go to Europe? I thought countries in the south China sea were more popular these days.

Any advice for someone who has been burned by advice from their bank? I was young and was trying to do the right thing but they sold me on duds. Now I have this RRSP that isn’t doing anything but I’m too terrified and untrusting to deal with it. I read as much as I can so I can make an informed decision but I feel incredibly dumb and scared that I’ll continue to make mistakes at the expense of my finances and my family’s goals. Thanks!

@Andrea B-W and @Beth I was in your exact position not long ago! I think you are both right and know that one of your first steps is educating yourself. Fee-only advice is a good place to start, but can be expensive relative to your portfolio if you have a small-ish amount to invest right now. Personally, I started right here, reading Boomer & Echo, learning about ETFs, discount brokerage accounts, and establishing a plan of buy and hold for the next 30+ years. The archives section of this site is full of info that is still relevant today. Just search for topics and read all the articles about it. Dan Bortolotti at canadiancouchpotato.com also outlines a simple DIY portfolio. There are many other great writers that are referenced in the weekly Weekend Reading article too. I’ve even emailed Robb and Dan and both were happy to help. Once you feel educated enough (but you will always have more questions), open an account, transfer your money over and get started! Good luck!